The Legal Framework for Conventional and Islamic Banks in Nigeria: A Cursory Analysis

Abstract

The legal framework for Conventional and Islamic Banks reflect the policies adopted in regulating and supervising the banking industry by the executive arm of the government. Hence, this article makes a cursory analysis of those legal framework for the conventional and Islamic Banks in Nigeria the aim of which is to make novel contribution in the body of existing literature. This became imperative considering the fact that Islamic Banks are not in any way exonerated from keeping strict banking standards observed by the conventional Banks and are at the same time
expected to meet the Shariah standards which is the origin of their banking principles. The study adopted the doctrinal research method which involves the use of primary and secondary sources of law. Having made a cursory analysis of the legal framework for the conventional and Islamic bank, it was discovered that the primary legislation for the regulation of Banks in Nigeria is the Banks and Other Financial Institutions Act (BOFIA) which, with the Central Bank of Nigeria (Establishment) Act 2007 (CBN Act), gives the Central Bank of Nigeria (CBN) powers to supervise and regulate Banks and other financial institutions in Nigeria. Hence, the creation of profit and loss sharing Banks now called Islamic Banks. It is observed that one of the legal challenges facing Islamic Banks in Nigeria is the problem of legislation. It therefore recommended that the Nigerian legislatures shall make moves to make further legislation to preserve and expand the legislative basis of the Islamic banking institutions in the country.